China GDP: 2020 economic growth revised down with Beijing braced for headwinds
- China revised down its 2020 gross domestic product (GDP) growth rate to 2.2 per cent year on year, from 2.3 per cent previously
- Last year’s GDP was also cut by 241.9 billion yuan (US$37.98 billion) from the initial figure published in January to 101.36 trillion yuan (US$15.91 trillion)
China has revised down the size of its economy as well as its growth rate for 2020 with Beijing increasingly worried about mounting headwinds and a further slowdown in economic activities.
Last year’s GDP was also cut by 241.9 billion yuan (US$37.98 billion) from the initial figure published in January to 101.36 trillion yuan (US$15.91 trillion).
The routine annual revision creates a lower base and could potentially result in a larger increase in 2021 than initially expected.
Consumption, one of the pillars for the growth, is still lagging due to lingering coronavirus pandemic control measures, and record numbers of college graduates will also place structural pressure on the job market.
“Uncertainty is much more important than other factors,” he said.
The coronavirus, local government debt and a sluggish property market have continued to add uncertainties for China’s economic recovery, which calls for policies to stabilise growth next year, a report by Tsinghua University said.
“China’s headline growth has peaked in the first half of 2021, and is set to slow in the following quarters due to base effects and policy normalisation. Consumption looks lukewarm, and export growth is likely to fall due to a high base,” said Hao Zhou, an economist with Commerzbank.
As one of only two countries with positive economic growth in 2020, PWC’s Global Consumer Insights Research 2021 China report showed that 58 per cent of Chinese consumers said they are optimistic about current economic conditions, a view held by 36 per cent of global consumers.
In July, the International Monetary Fund lowered its global growth forecast for 2021 to from 6.5 per cent to 5.9 per cent.
The World Trade Organization, meanwhile, said the coronavirus is expected to cause the global economy to decline by 13 to 32 per cent, more severe than the global financial crisis of 10 years ago, with double-digit declines in almost all regions.
Additional reporting by Ji Siqi